A new report released by accounting software provider Xero reveals that financial pressure, fatigue, and paying taxes are costing U.S. small business owners an average of 33 working days of productivity each year.
Based on a survey of hundreds of U.S. small business owners, Xero’s Emotional Tax Return 2026 Report confirms that financial stress isn’t just confined to tax season but instead has become a year-round emotional burden impacting owners’ wellbeing, productivity, and confidence. On average, owners spend eight hours a week consumed by worry.
“Xero is shedding light on a rising burden that has previously gone unseen. We call it the Emotional Tax, and it costs owners something far more valuable than money. It is the cumulative stress and mental load required to keep a business afloat in an operating environment that is harder to manage every year,” the report says. “Our study found that this invisible tax is being felt more acutely this year. More than four in five owners (81%) say their work has been more stressful than in previous years. Rising costs (44%) and unpredictable demand (28%) are the primary contributors. These factors push the impact of ownership well beyond the balance sheet.”
The business risk of burnout
Sustained pressure is rapidly evolving from a personal struggle to a business risk. With 70% of owners identifying financial management as a stressor, the burden has become so heavy that 40% have considered giving up their business entirely.
This dread is triggering a concerning business response: inaction. Rather than tackling finances head-on, stress is causing owners to freeze—putting their cash flow at risk. The tangible costs of this paralysis are significant, with nearly three-quarters (74%) of owners reporting that stress has negatively impacted their work, causing them to miss opportunities (34%), stifle creativity (30%), and delay decision-making (28%). Without real-time visibility into their numbers or regular input from a trusted advisor, owners struggle to manage cash flow effectively, leaving them vulnerable to financial shocks.
“Ongoing financial stress has become a persistent and defining factor in how small businesses operate,” Andrew Kanzer, managing director of North America at Xero, said in a statement. “When pressure around cash flow and rising costs continually drain owners’ time, focus, and decision-making capacity, they effectively become a hidden operating cost.”
The silent struggle
While the business impact is visible in the books, the personal toll often goes unseen as many owners suffer in silence. The findings reveal the impact of carrying business stress in isolation:
- Isolation: Nearly half of small business owners (43%) say they have hidden business-related stress from their family or partner, while many report withdrawing from social or professional support when pressure is high.
- Sleep deprivation: Over half (61%) of owners say they get less sleep than before starting their business, with nearly a quarter losing five or more hours of sleep a night.
- Sacrificing self-care: To cope with the load, 41% report exercising less, with some stopping altogether.
“Finding a way to turn constant effort into ease is essential for sustainable growth,” the report says.
Things small business owners would rather do than taxes
Chasing paperwork and crunching numbers can make anyone’s head spin. Many owners dread managing their finances, but Xero’s research reveals the true extent of that avoidance.
The stress often stems from a lack of clarity. The report says that 56% of small business owners in the U.S. have been caught off guard by a tax outcome.
Speaking of taxes, the report gives you an idea of how much small business owners hate working on them. The following are 14 things owners would rather do than their taxes:
- Go back to high school for a week (17%)
- Sit through a sales presentation every weekend for a month (14%)
- Listen to their least favorite song on repeat for eight hours (13%)
- Go to the dentist for a root canal (13%)
- Sit in the middle seat of a long-haul flight (12%)
- Eat the hottest wing on Hot Ones with no milk (11%)
- Get dumped over text message (11%)
- Lick a public transport pole (8%)
- Sit through a 10-hour training without snacks (8%)
- Have food poisoning on a work trip (8%)
- Attend an ex’s wedding (7%)
- Stand in a queue for an entire day (7%)
- Let a toddler do your makeup for an important meeting (6%)
- Get a colonoscopy without being sedated (6%)
Reclaiming control and reducing the emotional tax
U.S. small business owners currently sacrifice an average of 22 hours a month to financial management—time that often fuels anxiety rather than insight. However, the research highlights a clear exit opportunity from this avoidance trap.
“What strikes me most as a financial therapist is how many small business owners are carrying financial stress on their own,” Megan McCoy, Ph.D., an associate professor at Kansas State University, said in a statement. “When financial stress goes unspoken, it becomes more damaging. Hiding worry from loved ones, losing sleep and neglecting self-care only increases the emotional toll over time. Normalizing these experiences and encouraging support earlier can improve both personal wellbeing and business performance.”
The report says by using automation to remove the friction of manual tasks, and leaning on experts to navigate uncertainty, small businesses can replace year-round dread with confidence and feel empowered to make better data-driven decisions throughout the year.
“Many owners struggle in silence, ignoring a resource that could prevent financial fears. Without the right advice from an accountant when they are stressed, they are exposed to tax surprises and costly mistakes,” the report states. “The value of a qualified specialist is clear, as 23% of owners have faced an unexpectedly large tax bill due to uncertainty around claims or expenses. For the 31% of advisor-supported owners who say digital tools help most with reducing errors, the right partnership is the foundation of peace of mind.”
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